Determining the Need for a Compensation Consultant
There is no definitive test to determine when a church should hire a compensation consultant. However, churches paying compensation packages exceeding $100,000 should consider engaging a consultant to establish appropriate pay for senior leadership and highly compensated employees.
Why Use a Compensation Consultant?
- Beyond Salary Surveys: Compensation surveys may be insufficient for higher compensation levels.
- IRS Protection: A consultant helps churches establish a “Rebuttable Presumption of Reasonableness” for salaries.
- Regular Updates: Reports should be updated every 3-5 years or when major changes occur.
Choosing the Right Compensation Consultant
No governmental agency regulates who can call themselves a compensation consultant. Therefore, churches must choose consultants carefully.
Key Qualifications:
- Formal education in compensation theory, business, and human resources.
- Certifications such as:
- Senior Certified Professional (SCP) – Society of Human Resource Management (SHRM)
- Senior Professional in Human Resources (SPHR) – HR Certification Institute (HRCI)
- Certified Compensation Professional (CCP) – WorldatWork
- 10-15 years of experience in high-level human resource management.
- 5+ years of consulting experience.
Finding a Qualified Consultant
- Seek referrals from other churches, nonprofits, attorneys, and CPAs.
- Check references from past clients.
- Focus on experience and qualifications over cost.
Reviewing a Consultant’s Sample Report
Before hiring, request sample reports and ensure they include:
- Employer history
- Compensation philosophy
- Salary history for the position
- Employee qualifications
- All cash and noncash compensation elements
- Comparison with at least three compensation databases
- Application of databases to the evaluated position
- Relevant court decisions and applicable legal authorities
Final Thoughts
Hiring a compensation consultant is a strategic decision. Churches should prioritize expertise and experience to ensure fair, legally sound compensation practices.
